INVESTOR PRESENTATION April 2020 Some information provided in this - - PowerPoint PPT Presentation

April 2020

INVESTOR PRESENTATION

2

Some information provided in this document will be forward-looking, and accordingly, is subject to the Safe Harbor provisions of the federal securities law. These statements include, but are not limited to, potential impacts to our business related to the COVID-19 pandemic, statements regarding future revenues, gross margin, selling, general and administrative expenses,

• perating

income and

• perating

margin, income tax expense, capital expenditures, business prospects and product pipeline and the impact of the coronavirus. We caution you that these statements are subject to a number of risks and uncertainties described in the Risk Factors section of the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”). Accordingly, all actual results could differ materially from those described in this presentation. Those viewing this presentation are advised to refer to Crocs' Annual Report on Form 10-K, as well as other documents filed with the SEC for the additional discussions of these risk factors. Crocs is not

• bligated to update these forward-looking statements to reflect the impact of future events.

FORWARD-LOOKING STATEMENT

CONTENT

3

• COVID-19 Update
• Positioned for Global Growth
• Financial Results
• Appendix

4

Despite recent softness in our business due to the COVID-19 pandemic, Crocs remains a strong, vibrant brand that is very well positioned. In the near-term, we have no liquidity concerns and have taken quick action to ensure we will be strongly cash flow positive for the remainder of the year. Over the long-term, we are confident we will restore our momentum in 2021 and continue our positive trajectory for years to come.

– Andrew Rees, President and CEO

5

OUR COVID-19 PLAYBOOK

DEFENSE

Lower expenses Reduce working capital Defer capital expenditures Maximize liquidity

OFFENSE

Four key product pillars Powerful social & digital marketing Digital-led route to market Largest growth opportunity in Asia

6

Defensive Actions

Lower expenses

Reduced salaries and wages, lowered marketing investment, and fewer discretionary expenses

Reduce working capital

Tightly managing inventories and working with customers and vendors to manage receivables and payables

Defer capital expenditures

Deferred or cancelled certain investments that we were making to support growth

Maximize liquidity

Increased revolving credit facility, modified leverage ratios, temporarily suspended share repurchases

7

450K+

pairs donated globally to date

$11M

non-recurring expense in 2020

BEING THERE FOR HEALTHCARE

8

CUSTOMER FEEDBACK

9

CUSTOMER FEEDBACK

10

Largest Growth Opportunity in Asia

Asia: Largest long-term growth potential Americas: Strong growth momentum EMEA: Stable growth

Digital-Led Route to Market

E-commerce: Double-digit growth continues Retail: prioritize outlets as most profitable retail format Wholesale: Greatest growth

• pportunities within e-tail accounts

and distributors

Four Key Product Pillars

Clogs: Innovate & grow clog relevance Sandals: Significant long-term growth potential Visible Comfort Technology Personalization

LONG-TERM GROWTH DRIVERS

Powerful Social & Digital Marketing

Digital and social focus globally Come As You Are Brand ambassadors Social influencers Collaborations

11

Grow Clog Relevance

• Market leader in growing $5B* global category
• Crocs clog revenues +11% in Q1 2020 to ~66%
• f footwear sales
• Key drivers of clog growth and relevance are:

‒ Impactful collaborations across the globe ‒ Personalization with expanded Jibbitz charms

• Strongest growth in the Americas with

continued opportunity in Asia and EMEA

* Internal estimate. Source: British GQ, May 2020.

PRODUCT & MARKETING

12

• Growing $30B* global casual sandal market
• Fragmented market with no clear leader
• Consistent track record of growth

‒ Sandal revenue +10% in 2019 ‒ ~19% of footwear sales ‒ Pre-COVID, three consecutive years of double-digit growth

• Key drivers of sandal growth are:

‒ Targeting female explorers ‒ Marketing to support awareness ‒ Higher purchase frequency to address multiple wearing occasions

*Internal estimate

Significant Long-Term Growth Potential in Sandals

PRODUCT & MARKETING

13

Invest in Visible Comfort Technology

• LiteRide™ comfort franchise features

foam footbeds

• Top 5 franchise for Crocs
• Leveraged in other collections, e.g.,

Brooklyn sandals and Crocs at Work™

PRODUCT & MARKETING

14

• Personalization is a global megatrend
• Optimistic story-telling and personalization

will be even more critical post COVID-19

• Drives relevance for the Crocs brand
• Offers newness and inspiration at a

compelling price point

• Effect we see is an overall increase in clog

and sandal sales

Personalization with JibbitzTM Charms

PRODUCT & MARKETING

15

Highest rank ever for Crocs brand

In Piper Sandler’s Spring “Taking Stock with Teens” survey

Double-digit growth in brand metrics

Brand desirability, brand relevance and brand consideration each rose DD for 2018 and over the past three years in our annual brand survey

CELEBRITIES Drive mass reach MASS INFLUENCERS Drive mass engagement INTEREST-BASED INFLUENCERS Drive brand relevance UGC & EMPLOYEES Drive trust and local WOM

A Marketing Strategy to Drive Brand Heat

PRODUCT & MARKETING

16

• Evolve “Come As You Are”
• Heighten clog relevance and

sandal awareness

• Expand digital reach and

engagement in top 5 markets*

• Drive further brand heat and

relevance with collaborations

• Improve social engagement

through locally relevant platforms

Powerful Social & Digital Marketing

PRODUCT & MARKETING

* US, China, Japan, Korea and Germany.

17 Digital 30.1% Non-digital 69.9% CHANNEL

Digital-Led Route to Market

Wholesale Retail

E-commerce

Crocs.com Third-party marketplaces (e.g., eBay) e-tailers (e.g., Amazon, Ilzzo, Zalando) Distributors, multi- brand, and brick-and- mortar retailers Company-operated full-price retail and outlet stores, kiosks, and store-in-store

Digital

* Chart is as of percentage of Q1 sales.

18

Asia: greatest long-term growth opportunity

• Increase brand recognition and drive clog

relevance in China with Tier 1 celebrity, Yang Mi

• Multichannel growth in Japan and South Korea
• Strong E-commerce growth supported by

participation on key marketplaces Americas: largest region

• Maximize clog growth and expand sandal

penetration at wholesale

• Leverage leading position within major e-tailers
• Continue strong E-commerce growth

EMEA: most diverse region

• Maximize Digital Commerce with a focus on e-tail

and marketplaces

• Drive wholesale growth through distributors

REGION

Largest Growth Opportunity in Asia

19

• Record Americas revenue +14%
• Strong e-commerce revenue +16%
• Improved adjusted gross margin +110bps

to 48.0%*

• Strengthened CrocsTM brand with $5M

marketing investment

• Highest rank ever for CrocsTM in Piper

Sandler Spring “Taking Stock with Teens”

Q1 HIGHLIGHTS

FINANCIAL RESULTS

* See reconciliation to GAAP equivalents in Appendix

Q1 Financial Results

20

* Revenue growth on a constant currency basis and excluding impact of store closures. See reconciliation to GAAP equivalents in Appendix

1Q20

• vs. LY

Revenue $281.1 (3.3%)*

• Adj. Gross Margin

48.0% +110 bp Gross Margin 47.7% +120 bp

• Adj. SG&A as % of Revenue

38.7% (340 bp)

• Adj. Operating Margin

9.4% (230 bp)

• Adj. EPS

$0.22 ($0.14)

21

FY2020 Color

• Sharpest decline expected in Q2, as retail is

materially closed for most of the quarter

• E-commerce will continue to outperform in all regions
• SG&A of $440-$460M
• ~$30-$50M lower than 2019
• $100M lower than 2020 plan
• Capital expenditures of ~$30M
• Lower than pre-COVID guidance of $50-$60M
• Inventory to peak in Q2
• No liquidity concerns
• Positive free cash flow throughout remainder of 2020

22

APPENDIX

23

NON-GAAP RECONCILIATION

24

NON-GAAP RECONCILIATION (cont’d)

25